A DMP is an informal agreement whereby you pay what you can afford until the debts are repaid in full. Therefore it would take you about 24 years to repay if you administered it yourself and interest and charges were stopped.
An IVA is where you pay what you can afford for a period of normally five years and at the end of the term the balance of your debts are written off. It is a formal, legal agreement which returns more to creditors than if you went bankrupt.
In a nutshell, a DMP is where you negotiate with your creditors to freeze interest whilst making reduced payments to repay your debt. Over the course of the DMP it is expected that all of the debt will be repaid.
It is an informal arrangement and the creditors can agree, or disagree and can change their minds at any time. The arrangement will last as long as it takes to repay the debt.
An IVA, on the other hand, is a formal contract which binds both you and your creditors. During an IVA you make an agreed number of monthly payments (typically 60) based upon affordability. These can be increased if you earn more during the term.
At the end of the agreed term any of the debt that hasn't been paid off gets written off.
How have you arrived at the £87 repayment figure ? If correct it is probably too low for an IVA as they have to be economically viable.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
A quick overview not all info just the basics.
A DMP you pay the whole debt and it goes on until it is all paid, you have no protection, the creditors can add interest etc so you could end up in a never ending spiral which potentially could never end.
An IVA is court registered you have the protection from the court the debts are agreed at the outset so no more interest can be added (unless you pay 100% but that's a different reply). You will probably only make 60 payment at an agreed amount plus a %of overtime monies or bonus monies, etc. If you have equity in a property you will be expected to go a release of this either through a mortgage (practically impossible,) a secured loan or possibly adding an extra 12 months on in lieu of equity, the initial chairman's report will define how this is to be met. At the end of the agreed time any debt still owing is written off and the creditors are not allowed by law to chase you for it.
Either choice your credit rating will be shot for 6 years.
Last edited by Pandy on Tue Dec 09, 2014 5:18 pm, edited 1 time in total.
If life is what you make it, I must have been in a strange mood when I made mine
